Since our last update, BTC prices fell as the Microsoft induced rally fizzled out. Bitcoin is now trading just above the $332 swing low. Peercoin and Litecoin have hit new multi-month lows. Alternative cryptocurrency Namecoin however is still trading strong, up over 6 percent since Thursday.
Bitcoin Nears $332 Again
Bitcoin is currently quoted at $333.77, just shy of the important $332 swing low. The move up sparked by Microsoft accepting BTC for some payments stopped at $356 and it’s been downhill ever since. In a pattern we’ve seen several times this year, after the initial euphoria ended, prices have come back down to erase all gains.
Last week we said: ‘’ If you are bearish on bitcoin or litecoin, it would be prudent to wait for a break of today’s lows at $332 and $3.34 respectively.’’ A break of $332 could lead to more losses toward $319 per coin. If $319 gives way, the next support level stands at the $300 round figure, followed by the October 5th swing low at $285. Further down $266 per coin, the highest high for bitcoin during most of 2013, will likely be an important milestone for BTC. A break below $266, may usher in a longterm bear market.
Namecoin Strong Despite Market Rout
Namecoin is trading strong despite a general cryptocurrency market rout. We had this to say on NMC last week: ‘’ While the momentum is unmistakably down, the NMC/USD chart doesn’t look as weak, especially compared to LTC/USD.’’
In the five days since our last update, NMC/USD actually gained 6.4 percent from $0.85 to $0.905. This is after yesterday’s NMC rally topped out at $1.034. The declines were probably caused by profit taking and resumption of the BTC downtrend. I can’t find any fundamental reason for the most recent NMC rally (yet), so despite Namecoin’s gains yesterday, the cryptocurrency should continue to trade in tandem with bitcoin’s fortunes. If BTC/USD falls below $330, it will be hard for NMC bulls to keep supporting prices.
The first support level stands at the $0.85 mark. This is an important level for Namecoin. Last week, losses were limited by this mark, aside from a small blip to $0.845. Below here, we have some weak support at the November 21st swing low at $0.821, followed by the $0.80 round figure. Lower still, the important October 5th swing low at $0.783 may support prices. The year’s low for Namecoin at $0.751 ends the important levels on the lower end.
On the top side, a move back above $1.034 may lead to a renewed NMC rally toward $1.10. But with the rest of the market continuing to trade weak, Namecoin will have a hard time breaking from the pack. All of this is based on the assumption that there was no fundamental reason behind yesterday’s NMC move up. Sometimes these unexplained rallies are fuelled by buying on news that is not yet released to the general public.